The internationalization of Chinese private enterprises may provide new opportunities to the world. Photo:TUCHONG

As a foundational pillar of China’s non-public economy, private enterprises have long played a vital role in driving national economic growth and technological innovation. Their internationalization not only facilitates internal transformation and upgrading—boosting innovation and managerial capabilities—but also serves the country’s major national development strategies, establishing Chinese brands and showcasing China’s image on the international stage.

Innovation-driven structural upgrading in international expansion

Chinese private enterprises are now entering a phase of accelerated international expansion, marked by three core trends: increasing scale, diversified modes, and structural upgrading. First, the scale of overseas operations continues to grow. For the first time, private enterprises have become leading players in high-tech imports and exports, with relevant trade categories posting a growth rate of 12.6%. This signals a decisive shift among private enterprises toward high-end development. Second, the modes of internationalization are becoming increasingly diverse. Finally, the structure of private enterprises’ global presence is evolving along three key dimensions. Technologically, industrial upgrading is driving the shift toward higher-end exports, with high-tech enterprises now occupying center stage. In terms of global value chains, private enterprises are moving into mid- and high-end segments. After years of technological accumulation, domestic enterprises have significantly enhanced their capacity for large-scale production of complex upstream components, leading to a notable increase in intermediate goods as a share of total exports. In the cultural dimension, brand value is increasingly enhanced through creative and cultural input, which now serves as a key source of differentiation and resilience for Chinese private enterprises going global.

The strategic significance of Chinese private enterprises going global can be understood across three ascending levels.

At the level of enterprise development, the going global strategy has the dual effect of overcoming growth bottlenecks while building competitive advantages. International expansion opens up broader development space, while also exerting pressure for technological innovation and improved governance. According to new institutionalism organizational theory, the internationalization process subjects enterprises to dual adaptation pressures—technological and institutional—that in turn drive improvements in governance structures. As enterprises seek to meet these multifaceted demands, they adopt advanced global management practices, accelerating the shift from regional to global organizational capacity.

At the level of local governance, the going global strategy helps to encourage local governments to improve both governance and service provision to optimize the business environment. Market mechanisms not only limit inappropriate government intervention, but also incentivize a shift in local government roles to facilitators.

At the broader level of serving China’s high-quality economic development, the going global strategy facilitates the construction of a new development pattern. On one hand, domestic consumption remains constrained in certain areas; the going global of private enterprises thus serves as a critical engine for driving the international circulation. Through platforms such as the Belt and Road Initiative, private enterprises continuously expand the international market, facilitating smoother dual circulation of domestic and international markets. On the other hand, in the face of intense international competition, private enterprises are accelerating technological innovation, with a number of them emerging as global sci-tech forerunners.

Local strength for weathering storms

For private enterprises, going global is by no means smooth sailing. To navigate the challenges ahead, these enterprises must critically assess and draw upon their inherent strengths to mitigate risks—a necessary step in laying the groundwork for successful international expansion.

China is home to 41 industrial divisions, 207 industrial groups, and 666 industrial classes—making it the only country in the world to encompass the full spectrum of industrial classifications recognized by the United Nations. Among the world’s 500 major industrial products, China ranks first in output for more than 220. This comprehensive industrial system gives Chinese private enterprises a distinct competitive edge. Beyond this industrial advantage, they also benefit from China’s vast labor pool and the resulting “talent dividend.” The country has nearly 900 million working-age individuals—more than any other nation—and an average educational attainment of over 11 years. In terms of total talent resources, sci-tech personnel, and R&D staff, China ranks among the global forerunners.

Private enterprises further distinguish themselves through agile and efficient governance structures. Compared with state-owned enterprises, private enterprises often encounter fiercer market competition and less preferential resource allocation from local governments. Empirical data also shows that private enterprises tend to exhibit higher innovation efficiency. Thanks to advantages such as responsiveness to market signals, they are well-positioned to drive technological breakthroughs, foster more innovative configurations of production factors, and accelerate industrial transformation and upgrading. These attributes form a solid foundation for cultivating new quality productive forces.

As competition between China and the United States intensifies, the geopolitical risk has become a major challenge for the internationalization of Chinese private enterprises. Against this backdrop, economic restrictions—most notably tariff barriers—are an increasingly common obstacle. In addition to tariffs, foreign governments frequently initiate investigations under the guise of protecting intellectual property rights and curbing unfair competition. Meanwhile, in the process of going global, enterprises may face fierce homogenous competition, often concentrated around a single product type or field. In the absence of meaningful product differentiation or technological innovation, many enterprises have relied on aggressive price-cutting to gain market share—triggering sharp declines in export prices.

Tech-powered localization

Private enterprises in developed regions and countries, such as Europe and the United States, have all undergone phases of internationalization. Their experience offers valuable insights for China’s private sector, especially in three areas.

First, the government can play a pivotal role in aligning international economic and trade arrangements with domestic industrial policies. Countries with large-scale enterprises going global often reduce institutional barriers through multilateral trade networks and regional free trade agreements. Such intergovernmental arrangements help create favorable conditions for businesses to expand abroad. At the same time, well-calibrated industrial policies can consolidate and amplify the competitive advantages of domestic enterprises.

Second, enterprises should keep pace with technological evolution, seizing the cycle of change to build core competitive advantages. Throughout history, major technological shifts have enabled enterprises to quickly scale their international presence. During the First Industrial Revolution, steam power and railroads enabled British enterprises to establish a first-mover advantage in industrial manufacturing and transportation, transforming the United Kingdom into the world’s industrial hub. The Second Industrial Revolution witnessed the rise of the United States and Germany. The United States capitalized on electrification, the automotive sector, and assembly line production, leading to the emergence of multinationals like Ford and General Electric. Germany, through innovation in chemical engineering and precision manufacturing, cultivated world-class giants such as Siemens, Bayer, and BASF—strengthening its influence within the global industrial system.

Third, companies going global must embrace localization and cultivate win-win ecosystems. Those that simply transplant their original business models and product strategies often struggle to gain a foothold and build long-term recognition in foreign markets. To establish and maintain a stable position amid fierce international competition, enterprises need to thoroughly localize across multiple dimension—products, teams, and supply chain ecosystems. In terms of products, enterprises must gain deep insight into local consumer preferences, usage patterns, and cultural nuances, and adapt functionality and design accordingly. Regarding personnel, team localization should be stressed. Successful international enterprises usually attach great importance to recruiting local professionals and should progressively increase their representation in management and technical roles.

China’s private sector is currently in a phase of rapid international expansion. Despite impressive gains, the journey is far from over. Opportunities and challenges continue to emerge in tandem, demanding strategic foresight and adaptive responses.

First, in response to the innovation opportunities brought by emerging technologies such as new energy and artificial intelligence, a technology-driven model of internationalization is becoming the mainstream. Beyond maintaining advantages in photovoltaics, energy storage, intelligent equipment, cloud computing, and cross-border e-commerce, enterprises need to intensify R&D investment. They should continually aim to integrate technological innovation with industrial upgrading, thereby securing a more competitive position within global value chains.

Second, enterprises should capitalize on the ongoing restructuring of global industrial, supply, and value chains. Enterprises should be encouraged to move from “selling products” to “building ecosystems.” New technologies and business models often emerge ahead of regulatory frameworks and industry standards. This creates a window of opportunity for pioneering enterprises to help define those standards and shape the rules of the game.

Third, private enterprises should align with China’s broader diplomatic strategies to build localized partnerships rooted in mutual benefit. Given the persistence—and possible escalation—of trade barriers in certain regions, enterprises must adopt a more strategic approach to overseas market development.

Fourth, the going global momentum of small and medium-sized enterprises (SMEs) is gradually being unleashed. As more SMEs venture abroad, their role in driving innovation, generating employment, and improving livelihoods will become increasingly significant.

Yang Dian is a research fellow from the Institute of Sociology at the Chinese Academy of Social Sciences.